2020 Environmental Real Estate Issues

The Texas Supreme Court provided guidance on how pipeline companies can establish their authority to condemn property. The company must show the pipeline will carry a product identified in one of two Texas statutes and that the pipeline will serve at least one customer unaffiliated with the pipeline company.

Independent Statutes
Texas law gives “common carriers” authority to condemn. Both Section 2.105 of the Texas Business and Commerce Code and Section 111.002 of the Texas Natural Resources Code identify products that qualify for “common carrier” status. The Court rejected an argument that Section 2.105 is subordinate to Section 111.002, stating that the two sections “provide alternative paths to obtaining” common carrier status.

The Court also rejected the argument that polymer-grade polypropylene, a product of petroleum refining and not naturally occurring, is not an “oil product” under Section 2.105. The Court held that polymer-grade polypropylene is an “oil product,” because it “can be derived from crude petroleum.”

One Unaffiliated Customer
In addition to transporting a qualifying product, pipelines must serve a “public use” to have condemnation authority. The Court held the judge, not the jury, is to decide “public use” and that if the pipeline serves “at least one unaffiliated customer” it “serves a public use.”

New Trial as to Value
The owner argued the property, which already had 25 pipeline easements, was uniquely located and this condemnation prevented the owner from selling the easement to another. The Texas Supreme Court determined it was error when the trial court refused to allow evidence of the amounts other companies paid the owner for pipeline easements and sent the case back to the trial court for a new determination of value.

To see the opinion https://www.txcourts.gov/media/1454323/200567.pdf